Revocable Living Trust in Tennessee & Creditors Reach over The Underlying Assets

A revocable living trust is a legal document which has given the power to make decisions about the person’s money or property that’s held in the trust. A revocable living trust in Tennessee is a private legal arrangement prepared by a person during his lifetime which show how the property owned by him will be managed or changed in case when needed. The features of Revocable Living Trust are many which explain what it is and how it is planned.

There are three key roles. The first one is the Grantor called creator, the initial Trustee known as the manager, and the Beneficiary who is the receiver during the lifetime. Successor Trustee is the person whose name is mentioned who take over the management if the person (creator) become incapacitated or pass away. There is full control of the creator and can add assets, remove assets, or can end the trust when competent.

A revocable trust appears that it protects the assets from the third party but same is not the case. The living trusts do not protect the assets from creditors. The assets in the hands of the trust to manage are even subject to collections actions and lawsuits. They can be even evaluated by third. The creditors have some advantages on the assets concerning privacy.

Yes, creditors can fully reach assets inside a Tennessee revocable living trust during the grantor's lifetime.

There is lack of protection in case of revocable trusts and the same can be explained in the following ways:

• Grantor Control: There is retention of power to revoke, amend, or empty in the hand of creator of the trust under Tennessee law. So, the trust property is considered as the personal asset of person.

• Legal Separation: There is no liability separation. Since the assets are in individual name and hence the creditors can pursue trust assets as it is.

• Primary Purpose: The main purpose of forming a trust and handing over the assets to the trust is just its management. The purpose is having privacy, and smooth estate administration—not asset protection.

There are many other alternative strategies for Asset Protection in Tennessee. The first one is having Tennessee Investment Services Trust (TIST). In the above process a specialized domestic asset protection trust is formed which gives the position to a person to be a beneficiary while protecting the assets provided it is irrevocable and comply with statutory solvency and trustee rules. The other way is Irrevocable Trusts. In the above trust there is complete removal of personal ownership and control. Hence when there is full control, the creditors cannot enter once the statutory look-back periods pass.

So, proper planning of real estate and its management can help to secure it and pass the ownership to the real future owners.

Author Bio:-

Carl often writes about legal drafting, legal documents, legal forms, and legal agreements to help people who need them. You can find his thoughts at revocable estate trust blog.